Referral marketing benchmarks

Referral Marketing Benchmarks Revealed

Measure & Optimize Your Referral

Program

By Tony Mariotti@tonymariotti

http://twitter.com/tonymariotti

Here’s a fair question:

Here’s a fair question:

“What kind of ROI can I expect from a

referral program?”

Every business is unique. ≈

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Every business is unique. Here’s what they have in common:

Referral programs work!

Here are referral benchmark

ranges for each step of the

referral marketing funnel.

Followed by some

suggestions

for optimizing each step.

Here are referral benchmark

ranges for each step of the

referral marketing funnel.

The Referral Marketing Funnel


User Participation Rate



Sharing Rate

The Referral Marketing FunnelThe Referral Marketing Funnel


Sharing Rate

Referral Visits



Sharing Rate

Referral Visits

Referral Conversion Rate



Sharing Rate

Referral Visits


Lift on Revenue

Cost Per Acquisition

(CPA)



Sharing Rate

Referral Visits


Lift on Revenue


(CPA)

Track and optimize each step

This is the percentage of customer who share your business with friends,


creating the raw potential to drive new customers back to you.


This is the percentage of customer who share your business with friends,

These could be people who visit your website, follow you on social media, and even those who fit none of the preceding criteria but for whom you have an email address.


How To Improve

• Enable sharing in more places on your website

(homepage, order confirmation page, user

account pages, product pages, stand-alone

referral page, etc.)






• Promote your referral program to your email

list and social followers (email blast, post on

Facebook, Tweet)

How To Improve User Participation Rate





• Promote your referral program to your email

list and social followers (email blast, post on

Facebook, Tweet)

• Integrate your referral program into

newsletters, transactional emails and more…

How To Improve User Participation Rate

Sharing Rate

This is the percentage of people who share when presented with an opportunity to do so via a referral widget (overlay or embed).

Sharing Rate

This is the percentage of people who share when presented with an opportunity to do so via a referral widget (overlay or embed).

7%meh

Sharing Rate

This is the percentage of people who share when presented with an opportunity to do so via a referral widget (overlay or embed).15%

solid7%meh

Sharing Rate

This is the percentage of people who share when presented with an opportunity to do so via a referral widget (overlay or embed). 30%

You’ve nailed it!15%solid

7%meh

Some customers have exceeded a 50% sharing rate, a notable optimization goal for everyone.55%

INCREDIBLE!

• A/B test different referral incentives &

offers

How To Improve Sharing Rate


offers


store credit

$20 offfreegift

etc.loyalty

points


offers


store credit

$20 offfreegift

etc.loyalty

points

• A/B test variations to the content


offers


store credit

$20 offfreegift

etc.loyalty

points

• A/B test variations to the shared content

etc.images

call to

action shared

copy

The number of friends who see shared content on Facebook, Twitter or an email message

Referral Visits

Hey friend,I love this product.

Click here & get $20

off!

The number of friends who see shared content on Facebook, Twitter or an email message and then click to visit your website.

Referral Visits

Hey friend,I love this product.

Click here & get $20

off! www.

Referral Visits1 visit

per share: meh

www.


per share: meh

2 visits per share: solid

www.

www.

www.


per share: meh

2 visits per share: solid

More than 5 visits per share:you’ve nailed it!

www.

www.

www. www

.www

.

www.

www.

www.

• A/B test referral incentives/offers

How To Improve Referral Visits


• A/B test copy, images, etc.



• A/B test copy, images, etc.

EXPERT TIP: Shared images

on Facebook are quite

prominent in the friend’s

news feed and deserve

special attention.


The percentage of referred visitors (friends) that convert when they get to your site.



less than 4%

meh



10%solidless than 4%

meh



more than

30%

You’ve nailed it!10%solidless than 4%

meh



How To ImproveReferral Conversion Rate


• Build and A/B test a

dedicated referral

landing page

(much better than driving

referred visitors to your

home page)

How To ImproveReferral Conversion Rate

Referral Marketing Results

This is where the rubber meets the road –

the very things that determine if your time and effort has been worth it.



the very things that determine if your time and effort has been worth it.

Two key metrics summarize it all:


Lift on Revenue


(CPA)


the very thing that determines if your time and effort has been worth it.

Two key metrics summarize it all:

Lift on Revenue

less than 5%

meh

Lift on Revenue

5% to 15%

solid

less than 5%

meh

Lift on Revenue

30%

You’ve nailed it!

5% to 15%

solid

less than 5%

meh


Referral programs average ‘single digit CPAs.’

That is to say, you should see your cost per acquisition no more than $10 per new customer. $10

Compared to display advertising ($20 to $40 CPAs), Pay Per Click ($30) and display retargeting ($10), referral programs are extremely efficient.

$10


Thanks!For more tips and examples, visit us:

Tony Mariotti@tonymariotti

TwitterLinkedInBlog

https://twitter.com/tonymariotti

https://twitter.com/Friendbuy

https://www.linkedin.com/company/friendbuy

http://www.friendbuy.com/blog

http://www.friendbuy.com/?utm_source=slideshare&utm_medium=referralmarketing&utm_campaign=referral_marketing_benchmarks